Class 12 Business Studies Sample Paper 9 with Solutions (MCQs, Case-Based & Descriptive Questions)

Free CBSE Class 12 Business Studies Sample Paper

Imagine managing a school canteen during lunch break: you plan supplies, organise helpers, motivate classmates, and resolve customer complaints.

This free CBSE Class 12 Business Studies sample paper  helps you connect such everyday decisions with important board exam concepts.

It contains MCQs, assertion-reason questions, case-based questions and long-answer questions.

Revise the following chapters and topics:

• Nature and Significance of Management (coordination)
• Principles of Management (Fayol’s authority and responsibility, Taylor’s functional foremanship)
• Business Environment (technological changes)
• Planning (setting objectives)
• Organising (departmentalisation and delegation)
• Staffing (recruitment and training)
• Directing (leadership and communication)
• Controlling (corrective action)
• Financial Management (fixed and working capital)
• Financial Markets (stock exchange trading)
• Marketing Management (packaging, labelling and physical distribution)
• Consumer Protection (consumer rights)

This free worksheet contains MCQs, assertion-reason questions, case-based questions and long-answer questions.

Before you proceed further, below are the quick details:

• Class: 12
• Subject: Business Studies
• Sample Paper Number: 9
• Time Allowed: 3 Hours
• Maximum Marks: 80
• Sample Paper Status (Solved/Unsolved): Solved

Table of Contents

Questions

Answers

The worksheet begins from here.

Questions

General instructions:

• This question paper contains 34 questions.
• Answers to the questions carrying 3 marks may be from 50 to 75 words.
• Answers to the questions carrying 4 marks may be about 150 words.
• Answers to the questions carrying 6 marks may be about 200 words.
• Attempt all parts of the questions together.

Q1. Pricey Medicines was a world-level medicine manufacturing company. However, recently its fame had come down under the impact of resignations put forth by two of its departmental heads. These departmental heads were experts in their fields. One was leading the marketing department and the other was a scientist of repute who headed the manufacturing department. In the top-level management meeting, it was found that such departmental heads, who were specialists in their areas, cannot be tackled by unity of command. They were egoistic as they were specialists. After the meeting, things started to change for the organisation as all the departments started to work with one single target of giving the company its lost fame. There was a combined effort which doubled the revenue of the organisation. A special regulation system of including every level manager was brought into action. Thus, the overall functioning of the organisation was improved. In this case, a concept of management was missing. Identify it.

1. Cooperation
2. Coordination
3. Management
4. Efficiency

Q2. Digi Locker is the country's first secured cloud-based platform for the storage, issuance and verification of documents with the Driving License and Vehicle Registration System of the Road Transport Ministry. The integration of a government department with Digi Locker since its launch last year is one of the biggest of its kind. It will spare people the trouble of carrying licences and vehicle papers, which can be accessed on phones using the Digi Locker app. Identify the related dimension of the business environment indicated here.

1. Economic dimension
2. Social dimension
3. Political dimension
4. Technological dimension

Q3. Radiance Paint Company, which manufactures paints, has been enjoying a prominent market position as it manufactures the best-quality paints and made timely payment of taxes to the government. It assembles various inputs like finance, machines, raw materials, etc., from its business environment. But since last year, it has been dumping its untreated poisonous waste on the river bank, which has created many health problems for the people. As a result, the court has passed an order to seal the manufacturing unit of the company. Identify the importance of the business environment highlighted in the above case.

1. It helps in identifying opportunities and making first-mover advantage.
2. It helps the firm in identifying threats and early warning signals.
3. It helps in tapping useful resources.
4. None of the above

Q4. Identify the best definition of planning.

1. The core activity of planners and planning departments
2. An integrated process in which plans are formulated, carried out and controlled
3. Devising ways of achieving the objectives of an organisation
4. Setting an organisation's objectives and the means of achieving them

Q5. Shahi Spices Ltd. is the manufacturer of different food-specific spices like Rajma Masala, Chana Masala, Paneer Masala, etc. Mr. Raju, the owner of the company, has created different departments for purchase, production, marketing, finance and human resources. There are thirty employees working in the organisation. Planning is of paramount importance to the company as Mr. Raju believes that effective planning leads to the achievement of organisational objectives.

Which step of the process of one of the functions of management will he need to perform after identifying and dividing the work that has to be done in accordance with previously determined plans?

1. Departmentalisation
2. Assignment of duties
3. Establishing reporting relationships
4. None of the above

Q6. Name the outcome of the function of management which includes designing roles to be filled by suitably skilled people and defining the interrelationship between their roles so that ambiguity in the performance of duties can be eliminated.

1. Organisation structure
2. Delegation of authority
3. Decentralisation
4. Controlling

Q7. When employees are given promotion, their:

1. Motivation level improves.
2. Loyalty increases.
3. Job satisfaction level gets higher.
4. All of the above

Q8. Staffing is a very important function these days because of:

1. Advancement of technology
2. Increasing size of organisation
3. Complicated behaviour of human beings
4. All of the above

Q9. Which of the following statements is incorrect?

1. Every manager, from top executive to supervisor, performs the function of directing.
2. While other functions prepare a setting for action, directing initiates action in the organisation.
3. Directing does not take place throughout the life of the organisation irrespective of people occupying managerial positions.
4. Directing is first initiated at the top level and flows to the bottom through organisational hierarchy.

Q10. Read the following statements carefully.

Statement I: The process of holding securities in an electronic form is called dematerialisation, whereas reconverting electronic holdings into physical certificates is called rematerialisation.

Statement II: For this, the investor has to open a trading account with an organisation called a depository.

Choose the correct option from the options given below:

1. Statement I is true and II is false.
2. Statement II is true and I is false.
3. Both the statements are true.
4. Both the statements are false.

Q11. Which of the following is not a feature of leadership?

1. It shows the ability of an individual to influence others.
2. It leads to the achievement of organisational goals.
3. Leadership is a one-time process.
4. It leads to the desired change in the organisation.

Q12. The controlling function brings the management cycle back to:

1. Organising function
2. Directing function
3. Planning function
4. None of the above

Q13. The decision influenced by a company's growth opportunities is __________.

1. Dividend decision
2. Investment decision
3. Financing decision
4. All of the above

Q14. Match the non-financial incentives given in Column I with their respective statements given in Column II and choose the correct alternative.

Column I	Column II
A. Employee Recognition Programmes	(i) It is concerned with designing jobs that include a greater variety of work content and require a higher level of knowledge and skill.
B. Employee Participation	(ii) It means giving more autonomy and powers to subordinates.
C. Job Enrichment	(iii) It means involving employees in decision-making on issues related to them.
D. Employee Empowerment	(iv) It means acknowledgement with a show of appreciation.

1. A - (ii), B - (iii), C - (i), D - (iv)
2. A - (iv), B - (iii), C - (i), D - (ii)
3. A - (iv), B - (iii), C - (ii), D - (i)
4. A - (i), B - (iv), C - (ii), D - (iii)

Q15. Identify the function of the stock exchange being highlighted in the given picture.

1. Safety of transaction
2. Providing liquidity and marketability to existing securities
3. Contributes to economic growth
4. Pricing of securities

Q16. How many depositories are there in India?

1. 4
2. 1
3. 2
4. 3

Q17. Read the following statements—Assertion (A) and Reason (R)—and choose one of the correct alternatives given below.

Assertion (A): It is the responsibility of the consumer to buy only standardised goods as they provide quality assurance.

Reason (R): The consumers have certain responsibilities to follow and should keep a few things in mind while purchasing goods and services.

Alternatives:

1. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is true but Reason (R) is false.
4. Assertion (A) is false but Reason (R) is true.

Q18. Within two years of its inception, Bharti Limited has created a very positive reputation about itself and its products in the eyes of the general public by participating extensively in various social welfare programmes. Identify the component of the promotion mix described in the given lines.

1. Advertising
2. Personal selling
3. Public relation
4. Sales promotion

Q19. Which of the following statements is not true for 'Selling'?

1. Selling focuses on the need of the seller.
2. Selling is a much wider term.
3. Selling involves a fragmented approach to sell.
4. Selling starts after the product has been developed.

Q20. Arrange the steps involved in the trading procedure at the stock exchange in the correct sequence.

1. When the shares are bought or sold at the price mentioned, it will be communicated to the broker's terminal and the order will be executed electronically.
2. After the trade has been executed, within 24 hours the broker issues a contract note.
3. The investor then places an order with the broker to buy or sell shares.
4. The broker will then go online and connect to the main stock exchange and match the share and best price available.

1. (ii), (iv), (iii), (i)
2. (ii), (i), (iii), (iv)
3. (iii), (iv), (i), (ii)
4. (ii), (iii), (iv), (i)

Q21. The directors of Bhupesh Ltd., an organisation manufacturing computers, want to double sales and have given this responsibility to its sales manager. The sales manager has no authority either to increase the sales expenses or appoint new salesmen. Hence, he could not achieve the target.

Is the sales manager responsible for not achieving the target? Explain in brief the relevant principle in support of your answer.

Q22. Having transformed 2,500 kirana stores across eight cities into virtual supermarkets, the start-up Quick Bizz further decided in advance to collaborate with 15,00,000–20,00,000 store owners in the top 30 cities of the country by the end of the year. The company has set its eye on digitising over 1,00,000 kirana stores over the next 18–24 months.

1. Identify and explain the step in the process of one of the functions of management discussed in the above paragraph.
2. Also, explain the last step of the process to be performed by Quick Bizz.

Q23. With the development of new technologies in the field of packaging, more and more people are demanding packed products rather than loose ones.

1. Give the meaning of the term 'Packaging'.
2. State any two reasons for packaging acquiring great significance in the marketing of goods and services.

OR

Tomato Ltd., a food delivery service app, has recently faced criticism for the tampering of its products by delivery boys. Tomato Ltd. decided to put a hologram seal on the food packets in order to protect the contents from spoilage, leakage, pilferage and damage, along with a tag with a safety warning for the consumers to check the seal.

1. Which concept of marketing discussed above is performing the important function of communicating with the potential buyer and promoting the sale?
2. Also, explain any two points of its importance.

Q24. Abhishek bought a bottle of disinfectant spray from a nearby market. It had a knob which was to be opened in a particular way. However, there was no instruction on its package in this regard. Therefore, when he tried to open the knob in a casual way, some of the spray flew into his eyes. This affected his vision.

In the context of the above case:

1. Name the rights of the consumer being violated by the company.
2. State any two directions which the consumer court can issue to the company after being satisfied with the genuineness of the complaint.

OR

Sunita purchased a book from Jitesh Book Store. While reading the book, she found that sixteen pages were missing. She approached the seller of the book and complained about the missing pages. The seller promised that if the publisher was ready to change the book, he would change the same. After a week, the seller informed Sunita that the publisher had refused to change the book.

Where can Sunita file a complaint against the seller of the book? Give a reason in support of your answer. Also, explain who is a consumer as per the 'Consumer Protection Act, 2019'.

Q25. Explain the technique of 'Functional Foremanship' and the concept of 'Mental Revolution' as enunciated by F.W. Taylor.

OR

Reema is one of the most successful managers of her company, Globe Ltd. She knows that the principles of management are intended to apply to all types of organisations, business as well as non-business, small as well as large, public sector as well as private sector.

1. One of the points related to the nature of principles of management is being highlighted in the above description. Identify the point.
2. Explain any three other points of the nature of principles of management other than the one identified above.

Q26. Atul joins as a Regional Sales Head in the export division of a Fast Moving Consumer Goods (FMCG) company. In a departmental meeting, he asks one of his subordinates, Manik, to take charge of the company's new office in Dubai. He allocates the work to him and grants the necessary authority. However, within a month, by seeking regular feedback on the extent of work accomplished from Manik, Atul realises that Manik is not doing the work as per his expectations. So, he takes away the authority delegated to him and re-delegates the work to Prakrit. Due to the time wasted in this switchover, the work at the Dubai office suffered tremendously and the company was not able to meet its desired goals.

In the context of the above case:

1. Can the authority granted to a subordinate be taken back and re-delegated to another person?
2. Can Manik be held responsible for not meeting the work-related expectations of Atul? Give a suitable reason in support of your answer.
3. Differentiate between authority, responsibility and accountability on the basis of 'Meaning' and 'Flow'.

Q27. State any two advantages and two disadvantages of an informal organisation.

Q28. In an organisation, the staff is not well versed in communication skills. How can we improve communication among the existing staff? Give any four ways.

Q29. K&K Ltd. is engaged in manufacturing machine components. The target of production is 200 units daily. The company had been successfully attaining this target until two months ago. Over the last two months, it has been observed that daily production varies between 150–170 units. Identify any four possible causes for the decline in production and the steps to be taken to achieve the desired targets.

Q30. Shubh Ltd. is manufacturing steel at its plant in India. It is enjoying a buoyant demand for its products as economic growth is about 7%–8% and the demand for steel is growing. The company has decided to set up a new steel plant to cash in on the growing demand. It needs ₹2,000 crore to set up the plant and about ₹500 crore of working capital to start the new plant.

1. Enumerate the objective of financial management of Shubh Ltd.
2. Identify and state the decision taken by the finance manager in the above case.
3. State any two common factors affecting the fixed and working capital requirements of Shubh Ltd.

Q31. Aman, Suman and Anthony are partners in a firm engaged in the distribution of dairy products in Gujarat state. Aman is a holder of Senior Secondary School Certificate from CBSE with Business Studies as one of his elective subjects. Suman had done her post-graduation in History and Anthony in dairy farming. One day, there was a serious discussion between Suman and Anthony regarding the nature of management. Suman argued that management was a profession, whereas Anthony argued against it, saying that the legal and medical professions are the only professions because they fulfil all the conditions of a profession. Aman, on the basis of his knowledge of Business Studies, explained the nature of management as a profession to Suman and Anthony. Explain how Aman would have satisfied both Suman and Anthony.

OR

Ram, Shyam and Divyam are partners in a firm engaged in the distribution of dairy products in Uttar Pradesh. Ram is a holder of Senior Secondary School Certificate from CBSE with Business Studies as one of his elective subjects. Shyam had done his post-graduation in Hindi literature and Divyam in dairy farming. One day, there was a serious discussion between Shyam and Divyam regarding the nature of 'Management as a Science'. Shyam argued that management is not a science, whereas Divyam was of the opinion that management is a science. Ram intervened and corrected both Shyam and Divyam about the nature of management as a science with the help of his knowledge of Business Studies. Explain how Ram would have been able to satisfy both Shyam and Divyam.

Q32. Nishu Seth was working as a Human Resource Manager in a famous consultancy firm, LMN Global Services. Her job included preparing job descriptions, requirements, developing compensation and incentive plans and facilitating employee learning. They had entered into alliances with institutes to ensure continuous learning of their employees. With the jobs becoming more and more complex, LMN Global Services invested a large amount of money in making the employees learn the skills necessary to complete the jobs.

State, by giving any three points, how this investment is likely to benefit the organisation and the employees respectively.

OR

Feline Square Ltd. has 10 sales executives for selling its goods in a district. Now, the company desires to sell its products in two more districts. It needs 20 additional sales executives. Five sales executives already working have decided to retire shortly, and hence five more sales executives will have to be appointed in their place. Thus, in all, 25 sales executives will be needed by the company. The company has reserved five additional requirements for women. The company also decided that all orders shall be given to employees only after consulting the employees.

1. In the above case, which function of management has been highlighted?
2. State the next five steps to be followed in the process of the function of management identified in part (a).

Q33. Read the statements given in points 1 and 2 and answer the questions that follow.

1. Computers become obsolete faster and are replaced much sooner than, say, furniture.
   1. Identify and explain the factor affecting the requirement of fixed capital of an organisation indicated here.
   2. Give the meaning of fixed capital. Why must the decision to invest in fixed assets be taken very carefully?
2. A textile company is diversifying and starting a steel manufacturing plant.
   1. State, with reason, the effect of diversification on the fixed capital requirements of the company.
   2. State four long-term sources of capital.

Q34.

1. Explain any two functions of marketing from the following:
   1. Marketing planning
   2. Standardisation and grading
   3. Customer Support Services
2. Physical distribution includes some components for physically moving the goods from manufacturers to the customers. Explain any three such components.

Answers

Q1. (b) Coordination

Q2. (d) Technological dimension

Q3. (c) It helps in tapping useful resources.

Q4. (d) Setting an organisation's objectives and the means of achieving them.

Q5. (a) Departmentalisation

Q6. (a) Organisation structure

Q7. (d) All of the above

Q8. (d) All of the above

Q9. (c) Directing does not take place throughout the life of the organisation irrespective of people occupying managerial positions.

Q10. (a) Statement I is true and II is false.

Q11. (c) Leadership is a one-time process.

Q12. (c) Planning function

Q13. (a) Dividend decision

Q14. (b) A – (iv), B – (iii), C – (i), D – (ii)

Q15. (b) Providing liquidity and marketability to existing securities

Q16. (c) 2

Q17. (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

Q18. (c) Public relation

Q19. (b) Selling is a much wider term.

Q20. (c) (iii), (iv), (i), (ii)

Q21. No, the sales manager is not responsible for not achieving the targets because he had no authority either to increase the sales expenses or appoint new salesmen. Hence, in this case, the principle of Authority and Responsibility is violated.

• Authority means the right to order and obtain obedience. There are two types of authority:
  • Official authority, i.e., authority to command.
  • Personal authority, which is the authority of the individual manager.
• Responsibility means the obligation to perform the job assigned on time.
• Fayol suggested that there must be a balance between authority and responsibility.
• Giving authority without responsibility may lead to irresponsible use of authority.
• So, an organisation should build safeguards against abuse of managerial power.

Q22.

1. The function of management discussed in the given paragraph is Planning.

   The step of the planning process discussed is Setting objectives.

   • It is the first and foremost step.
   • Objectives may be set for the entire organisation and each department or unit within the organisation.
   • Objectives or goals specify what the organisation wants to achieve.
   • Objectives should be stated clearly for all departments, units and employees. They give direction to all departments.
   • Management must contribute ideas and participate in the objective-setting process.
   • If the end result is clear, it becomes easier to work towards the goals.
2. The last step to be performed by Quick Bizz as part of the process of planning is Follow-up action.
   • To see whether plans are being implemented and activities are performed according to schedule is also a part of the planning process.
   • Monitoring the plans is equally important to ensure that objectives are achieved.

Q23.

1. Packaging refers to the act of designing and producing the container or wrapper of a product.
2. Packaging has acquired great significance in the marketing of goods and services because of the following reasons:
   1. Rising standards of health and sanitation
      • People are inclined towards products which are prepared with proper sanitisation methods in accordance with health measures and safety measures.
      • This will reduce the chances of adulteration and contamination in the product.
      • Thus, it gives consumers a surety of safety.
   2. Self-service outlets
      • The self-service retail outlets are becoming very popular nowadays.
      • A good packaging which is attractive and has a good colour scheme along with eye-catching animated pictures and is consumer-friendly, then the consumers will surely pick that product from the shelves.
      • Thus, the role of promotion has gone to packaging.
   3. Innovational opportunity
      • There have been significant changes in the marketing scene because of development and innovation in packaging.
      • For example, milk and fruit juices can be stored for a longer period of time because of tetra packs.
      • Similarly, in the areas of pharmaceuticals, soft drinks, etc., lots of new innovations have come in respect of packaging.
   4. Product differentiation
      • Packaging is one of the very important means of creating product differentiation.
      • The colour, size, material, etc., of the package make a real difference in the perception of customers.
      • The quality of the product is also judged by the packaging it has.
      • For example, through a package of Paint or Hair Oil, consumers judge the quality of the product it contains.

   (Any two)

OR

1. Labelling
2. The importance of labelling is as follows:
   1. Describe the product and specify its contents
      • One of the most important functions of labels is to describe the product, its usage, cautions in use, etc., and specify its contents.
      • For example, the label on the package of a local tea company describes the company as Mohini Tea Company, an ISO 9001:2000 Certified Company. A popular brand of Prickly Heat Powder describes how the product provides relief from prickly heat and controls bacterial growth and infection, giving caution forbidding its application on cuts and wounds.
      • Packages of fast-food products like ready-to-eat dosa, idli or noodles describe the procedure of cooking these products.
   2. Identification of the product or brand
      • A label introduces the product by describing its name/brand, composition/ingredients, features, usage, approaches, expiry date, warnings, manufactured/registered date, instructions on how the product should be used, etc.
      • For example, the brand name of any product, say Biscuits or Potato Chips, imprinted on its package helps us to identify it from other brands.
   3. Grading of products
      • Grading facilitates putting products into different categories on the basis of performance and utility.
      • For example, a popular brand of Hair Conditioners comes in different categories for different hair, say for 'normal hair' and for other categories.
      • Different types of tea are sold by some brands under Yellow, Red and Green Label categories.
   4. Helps in promotion of products
      • An important function of a label is to aid in the promotion of the products.
      • A well-designed label can attract attention and give reason to purchase.
      • Many product labels provide promotional messages, for example, the pack of a popular Amla Hair Oil states, 'Baalon mein Dum, Life mein Fun'.
   5. Providing information required by law
      • There is some information which needs to be disclosed by the manufacturer to the consumer in adherence to law.
      • For example, packaged food articles must have a list of ingredients declaration regarding vegetarian or non-vegetarian food additives and date of manufacturing or packing on the label.
      • Such information is required on processed foods, drugs and tobacco products.
      • In the case of hazardous or poisonous material, appropriate safety-warning needs to be put on the label.

   Thus, labels perform a number of important functions relating to communicating with potential buyers and promoting the sale of the products. (Any two)

Q24.

1. The two rights of consumers being violated in the given case are:
   • Right to be informed
   • Right to safety
2. The two directions which the consumer court can issue to the company after being satisfied with the genuineness of the complaint are:
   • Not to offer hazardous goods for sale.
   • To pay a reasonable amount of compensation for any loss or injury suffered by the consumer due to the negligence of the marketer.

   (Or any other relevant point)

OR

Since the value of the goods or services in question, along with the compensation claimed, does not exceed one crore rupees, she will file a case in the District Commission.

Under the Consumer Protection Act, 2019, a consumer is defined as a person who avails the services or buys any good for self-use. Worth mentioning is that if a person buys any good or avails any service for resale or commercial purposes, he/she is not considered a consumer. This definition covers all types of transactions, i.e., offline and online through teleshopping, direct selling or multi-level marketing.

Q25.

Functional Foremanship

• In the factory system, the foreman is the pivot around whom revolves the entire production planning, implementation and control.
• Thus, Taylor focused on improving the performance of the foreman.
• Taylor observed and identified few qualities, such as intelligence, tact, judgement, etc., that a foreman should have. He found that no single person can have all the required qualities.
• Thus, he suggested that instead of a single person, there should be eight persons through which the functions of a foreman should be accomplished.
• Taylor advocated separation of planning and execution functions.
• This concept was extended to the lowest level of the shop floor.
• It was known as functional foremanship.
• Functional foremanship is an extension of the principle of division of work and specialisation to the shop floor.
• Under the factory manager, there was a planning in-charge and a production in-charge.
• Under the planning in-charge, four personnel, namely:
  • Instruction card clerk would draft instructions for the workers.
  • Route clerk would specify the route of production.
  • Time and cost clerk would prepare time and cost sheet.
  • Disciplinarian would ensure discipline.
• Under production in-charge, four personnel, namely:
  • Speed boss is responsible for timely and accurate completion of the job.
  • Gang boss keeps machines and tools, etc., ready for operation by workers.
  • Repair boss ensures proper working condition of machines and tools.
  • Inspector checks the quality of work.

Mental Revolution

• It involves a change in the attitude of workers and management towards one another from competition to cooperation.
• Both should realise that they require one another.
• Both should aim to increase the size of surplus. This would eliminate the need for any agitation.
• Management should share a part of surplus with workers. Workers should also contribute their might so that the company makes profits.
• This attitude will be good for both of them and also for the company. In the long run, only workers' well-being will ensure prosperity of the business.

OR

1. Universal applicability
2. The nature of principles of management is as follows:
   1. General guidelines
      • The principles are guidelines to action but do not provide readymade, straitjacket solutions to all managerial problems.
      • This is so because real business situations are very complex and dynamic and are a result of many factors.
      • However, the importance of principles cannot be underestimated because even a small guideline helps to solve a given problem.
      • For example, in dealing with a situation of conflict between two departments, a manager may emphasise the primacy of the overall goals of the organisation.
   2. Formed by practice and experimentation
      • The principles of management are formed by experience and collective wisdom of managers as well as experimentation.
      • For example, it is a matter of common experience that discipline is indispensable for accomplishing any purpose. This principle finds mention in management theory.
      • On the other hand, in order to remedy the problem of fatigue of workers in the factory, an experiment may be conducted to see the effect of improvement of physical conditions to reduce stress.
   3. Flexible
      • The principles of management are not rigid prescriptions, which have to be followed absolutely.
      • They are flexible and can be modified by the manager when the situation so demands.
      • They give the manager enough discretion to do so.
      • For example, the degree of concentration of authority (centralisation) or its dispersal (decentralisation) will depend upon the situations and circumstances of each enterprise.

      (Or any other relevant point)

Q26.

1. Yes, the authority granted to a subordinate can be taken back and re-delegated to another person.
2. Yes, Manik can be held responsible for not meeting the work-related expectations of Atul, as it is the obligation of a subordinate to perform the assigned duty to the best of his ability and skill.

3. Basis	Authority	Responsibility	Accountability
   (i) Meaning	It is the right of an individual to command his subordinates and to take action within the scope of his position.	It is the obligation of a subordinate to perform an assigned task properly.	It implies being answerable for the final outcome.
   (ii) Flow	It flows downward from superior to subordinate.	It flows upward from subordinate to superior.	It flows upward from subordinate to superior.

Q27. The advantages of informal organisation are:

• It leads to faster spread of information as well as quick feedback.
• It fulfils the social needs of the members.
• It contributes towards fulfilment of organisational objectives by compensating for inadequacies in formal organisation.

(Any two)

The disadvantages of informal organisation are:

• It leads to the spread of rumours.
• It may lead to resistance to change.
• It pressurises members to conform to group expectations, which may be against organisational interest.

(Any two)

Q28. The measures to overcome communication barriers are:

1. Clarify the ideas before communication
   • The problem to be communicated to subordinates should be clear in all its perspective to the executive himself.
   • The entire problem should be studied in depth, analysed and stated in such a manner that it is clearly conveyed to subordinates.
2. Communicate according to the needs of receiver
   • The level of understanding of the receiver should be crystal clear to the communicator.
   • A manager should adjust his communication according to the education and understanding levels of subordinates.
3. Consult others before communicating
   • Before actually communicating the message, it is better to involve others in developing a plan for communication.
   • Participation and involvement of subordinates may help to gain ready acceptance and willing cooperation of subordinates.
4. Beware of language, tone and content of message
   • The content of the message, tone, language used, manner in which the message is to be communicated are the important aspects of effective communication.
   • The language used should be understandable to the receiver and should not offend the sentiments of listeners. The message should be stimulating to evoke response from the listeners.

   (Or any other relevant point)

Q29. The possible causes for the decline in production are:

1. There may be some defect in machinery by which the components are produced.
2. Employees are not performing efficiently.
3. Sometimes employees may become lethargic.
4. The raw material and other equipment are not available on time.

The company can take the following steps to achieve the desired targets:

1. The company can replace the machinery or get it repaired if there is a fault in a machine.
2. If employees are not performing efficiently, the company can give training to employees.
3. If employees are becoming lethargic, the company needs to keep close supervision on their employees.
4. The company should ensure raw material and other equipment are available on time.

OR

1. Comparing actual performance with standards
   • This step involves comparison of actual performance with the standards.
   • Such comparison will reveal the deviation between actual and desired results.
   • Comparison becomes easier when standards are set in quantitative terms.
   • For instance, performance of a worker in terms of units produced in a week can be easily measured against the standard output for the week.
2. Analysing deviations
   • Some deviation in performance can be expected in all activities.
   • It is, therefore, important to determine the acceptable range of deviations.
   • At this stage, acceptable and non-acceptable deviations are analysed.

   Critical Point Control

   • It means keeping the focus on key result areas where deviations are not acceptable and it should be attended to on a priority basis.

   Management by Exception

   • It means if a manager tries to control everything, it may end up controlling nothing.
   • Thus, he should first handle the significant deviations, which require his priority.
3. Taking corrective action
   • The final step in the controlling process is taking corrective action.
   • No corrective action is required when the deviations are within acceptable limits.
   • However, when the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished.
   • Corrective action might involve training of employees if the production target could not be met. Similarly, if an important project is running behind schedule, corrective action might involve assigning of additional workers and equipment to the project and permission for overtime work.
   • In case the deviation cannot be corrected through managerial action, the standards may have to be revised.

Q30.

1. The objective of financial management of Shubh Ltd. is maximisation of shareholders' wealth.
2. The decision taken by the finance manager is Investment decision. It relates to how the firm's funds are invested in different assets—fixed assets and working capital.
3. The two common factors affecting fixed and working capital requirements of Shubh Ltd. are:
   • Nature of business
   • Scale of operations

   Fixed Capital:

   1. Nature of business
      • The type of business has a bearing upon the fixed capital requirements.
      • For example, a trading concern needs lower investment in fixed assets compared with a manufacturing organisation, since it does not require purchase of plant and machinery, etc.
   2. Scale of operations
      • A larger organisation operating at a higher scale needs bigger plant, more space, etc., and therefore, requires higher investment in fixed assets when compared with a smaller organisation.

   Working Capital:

   1. Nature of business
      • The basic nature of a business enterprise influences the amount of working capital required by it.
      • For example, a trading organisation needs a lower amount of working capital as compared to a manufacturing organisation because no processing takes place.
      • Similarly, service industries, which usually do not have to maintain inventory, require less working capital.
   2. Scale of operations
      • An organisation which is operating on a large scale will require more inventory as its working capital requirement will be more, compared to a small organisation.
      • For organisations which operate on a higher scale of operation, the quantum of inventory and debtors required is generally high.

Q31. Aman would have satisfied both Suman and Anthony by explaining the following features of management as a profession:

1. Well-defined body of knowledge. All professions are based on a well-defined body of knowledge that can be acquired through instruction. Management too is based on a systematic body of knowledge comprising well-defined principles. This feature of profession is present in management.
2. Restricted entry. The entry to the above-stated profession is restricted through a prescribed qualification. But there is no restriction on anyone being appointed as a manager in any business enterprise. So, presently this feature of profession is not present in management.
3. Professional association. Legal and medical professions are affiliated to a professional association like bar council and medical council which regulates entry, grants certificates of practising and formulates and enforces a code of conduct. There are several associations of practising managers in India, like the AIMA, that have laid down a code of conduct to regulate the activities of their members. There is, however, no compulsion for managers to be members of such an association. So, presently this feature of profession is not present in management.
4. Ethical code of conduct. Legal and medical professions are bound by a code of conduct which guides the behaviour of their members. AIMA has devised a code of conduct for Indian managers but there is no statutory backing for this code. So, presently this feature of profession is not present in management.
5. Service motive. The motive of legal and medical profession is to serve their client's interests by rendering dedicated and committed service. The basic purpose of management to help the organisation achieve its goal by providing good quality products at reasonable prices, thereby serving the society, is being increasingly recognised. So, presently this feature of profession is not fully present in management. This shows that management does not satisfy all the criteria of a profession. So, Aman would have been able to satisfy both Suman and Anthony by making them understand that Management is a profession but not a full-fledged one, yet it is still moving towards it.

(Any four)

OR

Ram would have satisfied both Shyam and Divyam by giving the following points for considering management as a science:

1. Existence of a systematised body of knowledge
   • Like science, management has its own theory, techniques and principles. It also draws some principles from various disciplines such as Economics, Sociology, Psychology and Mathematics.
   • So, this feature of science is present in management.
2. Principles based on experimentation
   • The principles of management have evolved over a period of time based on repeated experimentation and observation in different types of organisations. However, since management deals with human beings and human behaviour, the outcomes of these experiments are not capable of being accurately predicted or replicated.
   • Therefore, management can be called an inexact science.
3. Universal validity
   • The principles of management are not as exact as the principles of science and their application and their use is not universal.
   • They have to be modified according to a given situation.
   • However, they provide managers with certain standardised techniques that can be used in different situations irrespective of the area, region and country.
4. Cause and effect relationship
   • Principles of management like science establish cause and effect relationship between different variables.
   • For example, lack of unity of command would lead to confusion and indiscipline. So, this feature of science is also present in management.

Hence, management has some features of science that is the reason why it is considered as an inexact science or not a pure science. It is a soft science or a social science as management is concerned with human beings whose behaviour cannot be predicted with absolute accuracy.

Q32. The benefits of training and development to an organisation are as follows:

1. No wastage of efforts and money. Training is a systematic learning, always better than hit and trial methods which lead to wastage of efforts and money.
2. Higher profits. It enhances employee productivity both in terms of quantity and quality, leading to higher profits.
3. Equips the future manager. Training equips the future manager who can take over in case of emergency.
4. Reduces absenteeism and employee turnover. Training increases employee morale and reduces absenteeism and employee turnover.
5. Effective response. It helps in obtaining an effective response to fast changing environment-technological and economic.

(Any three)

The benefits of training and development to the employees are as follows:

1. Better career. Improved skills and knowledge due to training lead to better career of the individuals.
2. Earn more. Increased performance by the individuals helps them to earn more.
3. Less prone to accidents. Training makes the employees more efficient to handle machines. Thus, less prone to accidents.
4. Increases morale. Training increases the satisfaction and morale of employees.

(Any three)

OR

1. Staffing
2. The next steps to be followed in the process of staffing are:
   1. Recruitment
      • Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organisation.
      • The essential objective is to create a pool of prospective job candidates.
      • It is positive in nature as all applications are accepted; no application is rejected.
      • There are two sources of recruitment—Internal and External.
   2. Selection
      • Selection is the process of choosing from among the pool of prospective job candidates developed at the stage of recruitment.
      • The selection process serves two important purposes:
        • It ensures that the organisation gets the best among the available.
        • It enhances the self-esteem and prestige of those selected and conveys to them the seriousness with which things are done in the organisation.
      • Selection is negative in nature as rejection takes place.
   3. Placement and Orientation
      • Orientation means to give the selected candidate a brief presentation about the company and is introduced to his superiors, subordinates and colleagues, familiarising him with the rules and policies of the organisation.
      • It marks the beginning of socialisation of the candidate at the workplace.
      • It makes him comfortable, easy to adjust in a new environment, gives confidence.
      • Placement refers to the employee occupying the position or post for which the person has been selected.
   4. Training and Development

      Training

      • Training is any process by which the aptitudes, attitudes, skills and abilities of employees to perform specific jobs are increased.
      • It is a process of learning new skills and application of knowledge.
      • It attempts to improve their performance on the current job or prepare them for any intended job.

      Development

      • Development refers to the learning opportunities designed to help employees grow.
      • It covers not only those activities which improve job performance but also those which bring about growth of the personality, help individuals in the progress towards maturity and actualisation of their potential capacities so that they become not only good employees but better men and women.
   5. Performance appraisal
      • Every organisation has some pre-determined standards on the basis of which employees are evaluated on current or past performance.
      • So, performance appraisal includes defining the job, appraising the performance, and providing feedback.

Q33.

1. 1. The factor affecting the requirement of fixed capital of an organisation indicated here is technology upgradation. An organisation whose assets are prone to obsolescence requires more fixed capital as there is a frequent need of upgrading the technology and changing of fixed assets. Thus, the fixed assets requirement is more in this type of organisation.
   2. Fixed capital refers to investment in long-term assets. The decision to invest in fixed assets must be taken very carefully as the investment is usually quite large. Such decisions once taken are irrevocable except at a huge loss.
2. 1. With diversification, the fixed capital requirements of the company will increase as the investment in fixed capital will increase.
   2. The four long-term sources of capital are equity shares or preference shares, debentures, long-term loans and retained earnings.

Q34.

1. 1. Marketing planning. In this function of marketing, a detailed marketing plan is framed so that marketing objectives can be achieved. This plan can be to introduce a new product, promote an existing product, capture or enhance the existing market share. It consists of decisions regarding the type of product, market, means of production and sale.
   2. Standardisation and grading. Standardisation refers to the process of producing the goods and services with pre-determined specifications, which helps in achieving uniformity and consistency in output. It reduces the need for inspection, testing and evaluation of the products. Grading is the process of classification of the products into different groups, on the basis of some parameters like quality, quantity, size, etc. It is very useful for agricultural products.
   3. Customer support services. To maximise customer satisfaction, businesses should develop customer support services such as after-sales services, handling customer complaints and adjustments, providing credit services, maintenance services, technical services and consumer information helpline. These services help in bringing repeated sales from the customers and help to develop brand loyalty for a product.

   (Any two)

2. Physical distribution includes some components for physically moving the goods from manufacturers to the customers. They are:
   1. Order processing
      • In a typical buyer-seller relationship, order placement is the first step. Products flow from manufacturers to customers via channel members while orders flow in the reverse direction, from customers to manufacturers.
      • A good physical distribution system should provide for an accurate and speedy processing of orders, in the absence of which goods would reach the customers late or in wrong quantity or specifications.
      • This would result in customer dissatisfaction, with the danger of loss of business and goodwill.
   2. Transportation
      • Transportation is the means of carrying goods and raw materials from the point of production to the point of sale.
      • It is important because unless the goods are physically made available, the sale cannot be completed.
   3. Warehousing
      • Warehousing refers to the act of storing and assorting products in order to create time utility in them.
      • The basic purpose of warehousing activities is to arrange placement of goods and provide facilities to store them.
      • Generally, the efficiency of a firm in serving its customers will depend on where these warehouses are located and where these are to be delivered.
   4. Inventory control
      • A very important decision in respect of inventory is deciding about the level of inventory.
      • Higher the level of inventory, higher will be the level of service to customers but the cost of carrying the inventory will also be high because a lot of capital would be tied up in the stock.
      • Thus, a balance is to be maintained in respect of the cost and customer satisfaction.

   (Any three)

The End

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